The company also announced that it had reached an agreement with Truist Securities to lead a loan syndication for a revolving credit facility, which it anticipates will be used to finance part of the second step to wrap the pipeline acquisition in the next two months.
"I am delighted to announce the first acquisition of the Company since its IPO, which comprises exceptional songs and catalogues including classic tracks from some of the world's best-known songwriters and artists," Round Hill Music Royalty Fund Ltd. chair Trevor Bowen said in a statement. "With the acquisition now complete, the company has deployed a significant proportion of the gross proceeds raised in its recent IPO and subsequent placing. The Board remains totally committed to completing the acquisition of the second investment by the end of the first quarter of this year, thereby continuing to deliver the Company's investment objective and policy."
The pipeline investment catalog acquired in the first step by Round Hill Music Royalty Fund Ltd. includes songs from, among others, the Beatles, Marvin Gaye, Rod Stewart, James Brown, the Offspring, Kiss, Phil Collins, Celine Dion, Lady A and the Backstreet Boys, as well as a minority slice in the Carlin America portfolio majority owned by Round Hill Music Royalty Fund II, another commingled fund of institutional investors.
The company says the first part of its acquisition bought everything above except for the minority stake in the Carlin portfolio, which will be acquired in the planned second step that should be complete by March 31. The company says that the stake, which will cost an estimated $81.14 million, represents 29.14% of the Carlin copyrights. That means that the Carlin America catalog that Round Hill acquired in January 2018 for $245 million now carries a valuation of $278.5 million.
The Carlin portfolio contains songs like "What A Wonderful World," "Happy Together," "Under The Boardwalk," and "Total Eclipse of the Heart."
The overall portfolio, including the completed part and Carlin, generated $22.4 million in net publishers share, or gross profit after paying songwriter royalties, for the 12 months ending June 30, 2020 -- or a 16.2 times multiple of the $363 million valuation that the portfolio caries.
Round Hill says that 85% of the income generated by the portfolio is from compositions written between 1950 and 2010, while breaking out the portfolio by genre, rock comprises about 30% of income, country 30%, pop 19%, classic R&B 8%, and other genres 13%. Broken down by income streams, it said master recordings accounted for 28%, music publishing performance royalties 37%, synchronization about 19%, mechanical 12%, and other about 3%.
Beyond the completion of the initial targeted music assets, the company said it continues to build a pipeline of future acquisitions with a value of $500 million and will explore various options, including a potential equity offering to raise financing for those contemplated acquisitions.
"We are working hard to complete the acquisition of the shareholding in Carlin in short order," Round Hill Music CEO Josh Gruss said in a statement. "Once this has been completed, we can turn our attention to our longer-term pipeline of investment opportunities, where we are witnessing a large amount of exciting and high-quality catalogs for the fund."
The company also said it looks to make a 4.5% dividend payment to shareholders in the year ending Dec. 31, 2021, probably in two installments that are expected to total about $14.8 million.